If you want to hear some aspects of 3P TF business that aren't commonly talked about, you should listen to this interview.

Topics include:

Why he got into the business
How he got into the business
Product pricing
Competition between stores
Difficulties staying in the business

His story is not too different from that of how other retailer store owners that I know got their start.

The one subjective comment I'll make is that his mistake early on of selling products at significantly lower prices than all other retailers is naturally going to make him a target as that's upsetting the entire balance of the market for distributors, retailers, and the 3P companies. Larger companies aren't running as big a margin as he was able to being a solo operation, so since he's directly hurting their business by undercutting them on price rather than competing on other factors, they're going to fight back. Doesn't change my opinion of the businesses but I understand how the business works.

 

Darn .... I've been overpaying .....

I can handle the truth, but can others ....?

 

Everyone is overpaying compared to the literal cost of the products, if that's what you mean. This is true of every consumer products industry. Cut out the middlemen and go direct to source and you'll always be better off on a pure price basis. Other aspects may be more difficult like after-sales support, but in general if you are willing to put in the work to figure things out (and have the spare time to so do), you can save money.

 

That's not what I meant. I watched the interview. He said he wasn't doing it solely out of the goodness of his own heart. For Scoria even at 140, he had a profit of 35 after everything's been factored in (eBay fees, Paypal fees, and free shipping). What's ridiculous is obviously other companies tacking on 60 bucks and then GANGING on him. And some don't even offer free shipping. I am not asking to pay 55 bucks (the gross price), but 130 direct from him as he mentioned would have been fine.

No offense, but of course you will say that he made a mistake (you know why), but what's more fundamental here (although I already know about it) is all these Western retailers talking about free competition and not believing in it. Why is it anyone's business but his own on what price to charge? I mean do we need to ask some King for a permission next?

 

I don't think they are overpaying in China though, just here in the states mainly. that's why he got his so cheap and sold them as such.

But I'm sure Hellex there will probably correct me as he usually does on just about anything of mine he replies to.  

 

Basically, it's why buying direct from Japanese retailers is cheaper than going through BBTS. You're still paying for the service of someone importing it for you.

 

Yeah I think cutting out the middle man should totally be allowed.

this reminds me also with how furniture stores do their business. it's literally the same thing with them. If you order from the catalogs they order from you'll always get your stuff much cheaper. this is why I always prefer to buy anything I own direct from the manufacturer.

Of course these days even manufacturers tend to hike up prices.  

 

@hellex Yes, I have conversations with the owners of a couple of the larger 3P online retailers (that's the "you know why" in your post), so I have some insight into how those businesses operate, which is also why I'm able to give you a more balanced perspective on things. Don't mistake my comments for a defense of whatever practices he's accusing them of. I'm not. I'm simply saying every retailer is free to do what they want, and the market, the customers, decide whether they find it ethical/understandable or a company they want to do business with. I have no personal vested interest either way (which is something you may have misunderstood about me). I posted the link to this video because my primary interest is to share information with the community, especially when it's someone else sharing information about the industry that I might not be able to in good faith share myself.

Bear in mind, in the video, you're hearing the story from one individual who happens to have a connection with someone in CN where he was able to get certain products at a price far below the cost that is typically charged to retailers. He makes a number of assumptions about his competition, big and small, that, let's just say, may not always be correct.

Maybe he did. The main retailers did not. Just to give you some insight into the other side of the story, cost on Scoria back in the day for the main North American retailers was right around $140. That's before adding the costs incurred to box, pack, and ship it to individual customers. It should be clear why they would have been bothered by someone undercutting them significantly to the point they would have to sell it at a loss if they tried to compete, and if that were true of every product, would theoretically put them out of business, so they are going to push back.

You're hearing in the video about the few examples where the prices were such an issue that it caused a reaction. Most of the time, prices aren't actually problematic and all stores end up within a few bucks of each other because they're generally paying the same cost to acquire the product from the manufacturer. A few bucks cheaper isn't an issue, especially for retailers that aim to attract business through other factors like loyalty discounts, free shipping, customer service, etc.

As to his comments around the 45-minute mark, I can confirm for you that the owners of BBTS and TFS are not sitting there processing orders themselves and have not been for some time, while the owners of other shops I know generally have full-time day jobs to pay the bills and do the collectibles retail business on the side. They are actually doing their own work to process and pack orders and provide customer service.

But I also don't see it as a bad thing for a business to grow to the point of needing to hire staff to help with customer service or order processing and eventually the owner can free up their time to focus on other aspects of the business that help it grow organically like building relationships with companies producing the products or building a proper business strategy and marketing strategy for their business so it has a defined ethos and an intended path for the future.

Don't mistake my emphasis on treating both sides fairly with being in favor of less competition. I'm actually of a similar mindset to you that in a free market, competition is good, and to a large degree, all's fair and we the collectors benefit from it. The customer wins when there's more competition and business owners like "Hung" find new ways to lower prices. Just don't take everything any one business owner says as gospel.

 

You would think once those big retailers got that big, they would be able to purchase direct, same as Hung did, and negotiate larger bulk discounts. That's always been teh case in other retail markets. If they say otherwise, I'd be suspect.

 

They do, but as he mentioned in the video, some 3Ps have been raising the price they charge to retailers so over time margins have been shrinking.

 

He blatantly said that the spike of the prices happened because people were willing to pay for it not because of added costs...It reminds me one time that i got "attacked" on the Ft Phoenix thread cause i reacted to a couple of morons who were talking about how they were willing to pay 300+ for it..I said they shouldnt be and that this kind of behavior encourages the retailers to spike up the prices...What do you know a retailer himself just confirmed that

 

Thars extremely enlightening. 30% markup is standard across a lot of retail sectors, and dead on for toys.

And even that can be barely enough to operate. Net profits might be 5% if you're lucky.

 

Yeah, the only possible outcome of collectors blabbing that they would gladly pay more (or a lot) for a figure is the 3P deciding they might as well raise the price. There's no good that can come of that sort of comment.

As to the other part about cost, I think you may have misunderstood. Some 3Ps over time have raised the price they charge retailers for similar types of products (this price is the retailer's cost). Yet we haven't really seen the selling price rise at retail, which means the margin is shrinking for the retailers when their cost goes up but their sale price stays flat. Meanwhile, people who buy direct in CN may still be getting it at a much lower cost. This further disadvantages the retailers' ability to compete in their own market.
Some 3Ps have recognized how this could have a long term detrimental effect on their ability to put as much of their product into those markets and some have responded by attempting to enact some form of regional selling boundaries or sales support geo limitations to attempt to help level the playing field for the retailers. The idea that it's the big retailers complaining because they can't make as much margin is not entirely true. The 3Ps themselves, when made aware that there is cross-regional price arbitrage going on, have asked retailers to let them know about it so they can try to address it. This is different than what "Hung" said in the video, but now you have two perspectives to consider rather than just one. There are elements of truth in both.

 

Its funny because I've heard similar stories about some of these stores that was given this guy trouble beyond the "I'm going to tell you" BS. I took it with a grain a salt because I like to hear from the horses mouth but now, I have no doubt its all true.

Its not a coincidence the stories are similar from two different people selling Transformers.

 

Quality contributions all around, so far. So, don’t be too hard on yourself, Edge-san. I’m not sure when I’ll get around to watching this, but it’s definitely curious that BBTS, TFS, and others aren’t getting better rates after their years of service.

We got these fold out, Lincoln Log looking couches and chairs from an outlet of Direct Buy some ten or fifteen years ago. It didn’t really feel direct, and the warehouse we picked them up in did seem like it was dusty and dingy enough to be an action movie set though...  

Moreover, I like buying directly from a game or toy company’s site because that leads me to hope that they’re getting more for their sale. But, it’s more expensive to sell and ship items individually than to just box up and send out some pallets of figures, so maybe they’d be better off without running fulfillment services, perhaps.

 

Ha! Have you been on the MP BW Dinobot and Megatron thread? People said the price was justified.

 

FanaTics and FansTrolls have no hope .... But sadly these kinds of behaviors are not limited to them. And in fact I would argue they are in the end not that harmful. More harmful are the community "experts"/"assets" who are constantly harping about part counts, paint etc. These people are providing false justifications for something they obviously have no knowledge about.

 

Wait what. I bought one from Amazon JP and I feel it's overpriced, but hei, I hate cash in my pocket!!! Next time around, I expect my fellow citizens to bail me out.

 

There was a time last year where nearly every new product thread seemed to have at least a handful of overly excited collectors who immediately started guessing at the price and always on the high end of reasonable. "Do you think it will be $xxx? Maybe even $yyy! Hell, I'd pay $z,zzz for this amazing product!1!!one!"
That's the harmful kind of behavior ZEGR is talking about that could lead 3Ps to decide to raise the MSRP before they set and announce it.
People who, after a product's price is announced, try to justify the price by describing the product's assets or comparing it to other products may be fans of the company but more than likely are only trying to justify their own purchase of an expensive figure. I don't see how that sort of speculation is harmful, let alone more harmful. imho, even reviewers who tend to be overly positive about the products they review aren't doing as much direct harm as people talking up the price before it's even announced.

 

I had to stop reading that thread lol, I could not wrap my head around how some people were getting mad at others for saying it was too expensive. Plus the excuses used to justify said price. I like the 3p forums, it's slightly less hostile lol.